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While digging a well in March of Year 1, Taxpayer finds a buried box containing $50,000 in cash. Under the law of Taxpayers state, title
While digging a well in March of Year 1, Taxpayer finds a buried box containing $50,000 in cash. Under the law of Taxpayers state, title belongs to the finder against everyone in the world except the true owner.
- Taxpayers friend, who is with him, immediately says it is his money, which he had buried on Taxpayers land because he doesnt trust banks, and immediately institutes a lawsuit against Taxpayer. Two years later, in March of Year 3. Friends lawsuit is dismissed with prejudice (meaning he cannot bring it again); and Friend does not appeal.
- In January of Year 4, Neighbor, who has heard about Taxpayers discovery, brings suit on the ground that the found money is his. He explains he meant to bury the money on his own land, but became confused over the boundary between his land and Taxpayers. Neighbors suit is dismissed with prejudice in November of Year 4.
- No further claims are made against Taxpayer for the discovered money through the end of Year 4.
In which of the following yearsif anyis the $50,000 includible in Taxpayers income:
- Year 1
- Year 2
- Year 3
- Year 4
- None of the above
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